HSM 340 Week 3 Quiz

1.

(TCO 3) When considering how changes in volume affect total fixed costs, it is important to consider:

2.

(TCO 3) To maximize the amount of profit realized from a rate increase, charges should be increased most in departments with:

3.

(TCO 3) Your controller has told you that the marginal profit of DRG 209 (major joint procedure) for a Medicare patient exceeds the marginal profit for an average charge patient. Why might this occur?

4. (TCO 3)

Your hospital has been approached by a major HMO to perform all their DRG 225 cases (foot surgeries). They have offered a flat payment of $8,000 per case. You have reviewed your charges for DRG 225 during the last year and found the following profile:

Average Charge: $11,300

Average LOS: 4.5 Days

5. (TCO 3) David Jones, the new administrator for a surgical clinic, was trying to determine how to allocate his indirect expenses. His staff was complaining that the current method of taking a percentage of revenues was unfair. He decided to try to allocate utilities based on square footage of each department, administration based on direct costs, and laboratory based on tests. Use the information in the chart below to answer the question.

6. (TCO 3) Your hospital has been approached by a major HMO to perform all their MS-DRG 470 cases (major joint procedures). They have offered a flat price of $10,000 per case. You have reviewed your charges for MS-DRG 470 during the last year and found the following profile:

7.

(TCO 3) How are costs classified?